ISTANBUL (Reuters) -- A U.S. resolution that branded as genocide the killing of Armenians by Ottoman Turks during World War I will greatly harm U.S.-Turkish relations, Prime Minister Tayyip Erdogan has said.

NATO member Turkey, an ally crucial to U.S. interests in Iraq, Iran, Afghanistan and the Middle East, has expressed its outrage at the March 4 vote and recalled its envoy to the United States, who returned to Ankara today.

"The decision of the Foreign Affairs Committee will not hurt Turkey, but it will greatly harm bilateral relations, interests and vision. Turkey will not be the one who loses," said Erdogan, speaking at a summit of Turkish businessmen.

The Obama administration, which made a last-minute appeal against the resolution, voting of which was broadcast live on Turkish television, has sought to limit fallout and has vowed to stop the non-binding vote from going further in Congress.

Turkey has said the resolution could also jeopardize an already fragile peace process between Turkey and Armenia to end a century of hostilities and lead to further instability in the south Caucasus, an area crisscrossed by oil and gas pipelines to Europe.

The resolution urges Obama to use the term "genocide" when he delivers his annual message on the Armenian massacres in April.

Turkey accepts that many Christian Armenians were killed by Ottoman Turks but denies that up to 1.5 million died and that it amounted to genocide -- a term employed by many Western historians and some foreign parliaments.

Some analysts fear the vote may alienate Turkey at a time when there are concerns that its warmer ties with Syria, Iran, as well as Russia, marked a shift away from its traditional Western allies.

Commentators had said the bill could affect Washington's use of the Incirlik Air base in southeast Turkey. Incirlik is vital in logistical support for U.S. troops serving in Iraq and Afghanistan.

Turkey is a transit route for U.S. troops going to and from Iraq, and has 1,700 noncombat troops in Afghanistan.

Ankara has also played a key role in Obama's strategy to get Afghanistan and Pakistan to work together in fighting Al-Qaeda and Taliban militants in their borders and has hosted high-level talks between Pakistan and Afghanistan.